Tesco how ?

[JEREMY HAWKE]

http://www.bbc.co.uk/news/business-32408661

How can this happen when they don't even pay their employees wages . The wage bill for the last 15 years has been topped up by government tax credits . It has really been on par with an old communist state where the organisation is government backed . So we have spent 15 years topping up their wage bill and they still cant cut the mustard .
I would not have a problem normally but I do when we provide this wage bill support to large companies

 

[Mpg]

Redundancies, Store closures. Lost rent Is a large part of it..........According to some inside sources

 

[JEREMY HAWKE]

Redundancies, Store closures. Lost rent Is a large part of it..........According to some inside sources

I agree MPG but nobody in this country never ever talks about wage bill support (working tax credits) even in an election period !!!

 

[Swisaw]

... and some one was asking us to buy tesco shares.

This big loss can be described as the result of a deliquent management.

 

[roydmoorian]

http://en.wikipedia.org/wiki/Diseconomies_of_scale

 

[UKSBD]

I agree MPG but nobody in this country never ever talks about wage bill support (working tax credits) even in an election period !!!

You think the minimum wage should be £11.50 an hour?
That's what it would have to be to take people out of Working Tax Credits

 

[The Byre]

I have seen this all before - in Germany.

These large sheds (Tesco and all the others) are built on having vast ranges and vast debt. Tesco only has to experience a slight downturn in trade for it to be in real trouble. That is inevitable if you have large amounts of debt.

Debt can be a fine thing, if you (a) know how to use it and (b) use it for growth.

But once you have done all that growth, you must concentrate your efforts on paying down the debt and turning a profit. If you fail to concentrate all your efforts on creating real value in your business, you have a massive soft underbelly, just waiting to be slit open.

Aldi, Lidl and possibly Waitrose must have rubbed their eyes with disbelief when they saw the way Tesco and most other large supermarket chains were becoming addicted to debt and addicted to needing over-long payment periods from suppliers, addicted to sale-and-lease-back deals on real estate and addicted to other types of debt, like bonds, bank loans and share issues.

For debt-free and privately owned German discounters, it must be like shooting fish in a barrel!

But then they've done it before and in country after country. The model is a simple one. You enter the market slowly. Nobody pays attention, after all, you only have a handful of stores and just one or two distribution centres. These grow and make a profit and you use that profit to open more stores and more distribution centres, as you grow geographically across the country.

The opposition sleeps as you grow and the initial process takes about 20 years before the competition wakes up to what is happening. By the time they do wake up, it's too late, you have real profits, real market share, real value and momentum on your side.

The range of goods has been fine-tuned by decades of experience. Everything from the size of the store, the layout and the filling-station-like location, the training programmes, the management structure, you name it and Lidl and Aldi know exactly how it's done!

Whilst the opposition is planning for the next 100 years, Tesco, loaded with debt, is forced to stagger from one short-term and stop-gap strategy to another. On-line, loyalty cards, cheap petrol, celebrity endorsements, 24 types of olive oil, loss-leaders, ultra-cheap clothing, home delivery, convenience stores, Tesco wriggles this way and that, as it sinks into a swamp of its own making.

In the 1970s a new word was born in business German - 'Aldifizierung' (Aldification).

Remember that word - you'll get to hear it more often!

 

[Deleted member 59730]

Anyone who has tried to be a supplier to any of the big chains will know the answer. Wet behind the ears buyers and management types have ALL the answers. They even have all the answers for your product when it is quite obvious they do not. Such is their arrogance they just don't think that they might be wrong.

At some stage about 25 years ago perceived wisdom changed from thinking of 'profit per square foot' into 'margin'. Tesco is stuffed with high margin goods which don't sell. Lidl is full of stuff at low margin which moves much faster. Guess which one has the best return per square foot?

 

[vvaannmmaann]

I was reading Cityindex earlier.Seems among the Tesco portfolio is the Dobbies Garden Centre chain,the Giraffe restaurants and a chain of coffee shops.These are possible assets they may sell to cover their debts.

 

[Cobby]

The range of goods has been fine-tuned by decades of experience. Everything from the size of the store, the layout and the filling-station-like location, the training programmes, the management structure, you name it and Lidl and Aldi know exactly how it's done!

The layouts are terrible, the structures often inappropriate, and the staff are largely worthless. I can see where their margins are made.

In the 1970s a new word was born in business German - 'Aldifizierung' (Aldification).

At this point, 'Aldification' means little more than making something cheap and nasty.

 

[KM-Tiger]

At this point, 'Aldification' means little more than making something cheap and nasty.

It doesn't really matter.

What has done for Tesco, and the other "big" supermarkets, is that the habit of doing the weekly shop in one supermarket is dying out. People now use multiple supermarkets including online. And couldn't care less if the customer experience is crap id the price is right.

It will be interesting to see who drops out of online first. For the conventional supermarkets online is costly. It's only Ocado that have invested in the technology to make a profit from online. And are expanding. They are building a new distribution centre near me.

 

[The Byre]

The layouts are terrible, the structures often inappropriate, and the staff are largely worthless. I can see where their margins are made. At this point, 'Aldification' means little more than making something cheap and nasty.

I thought we are business people here, discussing a development in the world of retail. That is a rather silly and inaccurate way of looking at a development in the market. (Or are you suggesting that Marmite at Lidl or potatoes at Aldi are cheaper and nastier than at Tesco, that a management trainee at £40k with a 2.1 in a science subject is worthless and that Aldi has achieved over 30% growth through inappropriate structures?)

Aldification is happening all over the place. It is when a private company with little or no debt goes for limited range and low margins, to build up real equity over many decades. One German music shop owner even has a large Aldi sign in his office, to reinforce the message that he is discounting and building value.

US-based PE companies are also following this model. They avoid debt and as a consequence, can only grow slowly, but that growth is real.

I can think of one software company that is owned by one person, that sells a complete package that is certainly as good or perhaps better than the competition (who charge about $1,000). His price is $60. The R&D is all based on well-paid freelancers, he indulges in no marketing other than word-of-mouth, has no regional offices and relies on user groups for tech support.

The main competition is loaded with debt, has nearly 2,000 staff, 27 offices around the World and has an executive suite that trousers over $20m p.a. and the usual gaggle of shareholders and board of governors - and is losing money!

The whole point of Aldifying the market is to realise two things -

1. That the customer knows that one or two types of sugar at low prices and left in their boxes and on pallets are every bit as sweet as 17 different brands at high prices and carefully arranged and displayed.

2. Profits lead to growth and growth based on profit leads to company value.

 

[Cobby]

I thought we are business people here, discussing a development in the world of retail. That is a rather silly and inaccurate way of looking at a development in the market.

If you are talking about being silly and concerned about accuracy then all I'm doing is pointing a finger at a mildly blinkered sycophant. You are trying to attribute an economic shift and a niche market development to very small and specific items which are simply not present in many cases. This does not follow that, etc.

(Or are you suggesting that Marmite at Lidl or potatoes at Aldi are cheaper and nastier than at Tesco, that a management trainee at £40k with a 2.1 in a science subject is worthless

Are you suggesting that the chocolates with near identical branding but called "Twux" that are noticeably lower quality than their brand-name counterpart would *not* be described as "cheap and nasty"?
That a roomful of staff unable to organise themselves to clear aisles and/or serve a group of around 30 customers in reasonable time, are not worthless?

Aldification is happening all over the place.

Yes it is, you only have to look at the prevalence of pound shops on the high street to see things getting cheap and nasty.

 

[Deleted member 59730]

I don't have an Aldi near me but I do shop often at Lidl. The staff are friendly and cheerful and rush to open other tills if queues develop. Unlike Sainsbury who delight in closing tills even when there are long queues.

As for quality Lidl is streets ahead of Tesco.

 

[UKSBD]

Are you suggesting that the chocolates with near identical branding but called "Twux" that are noticeably lower quality than their brand-name counterpart would *not* be described as "cheap and nasty"?

I hate the shops that do that

Our local Co-Op put their piss poor fruit juice right next to the Tropicana in nearly idendical packaging, they put a cheap Nutella alternative in Nutella style jars right next to the Nutella and the final straw was putting their carp jam next to the Bonne Mamam.

Even worse, they appear to swap them around every now and then hoping you pick up the wrong one

It seems to happening more and more, about time the big brands tried to stop them Passing Off.

 

[MASSEY]

I hate the shops that do that

Our local Co-Op put their piss poor fruit juice right next to the Tropicana in nearly idendical packaging, they put a cheap Nutella alternative in Nutella style jars right next to the Nutella and the final straw was putting their carp jam next to the Bonne Mamam.

Even worse, they appear to swap them around every now and then hoping you pick up the wrong one

It seems to happening more and more, about time the big brands tried to stop them Passing Off.

Co-op is pricey i find, and the quality is worse than Tesco...

Only go there now and then because it's local and i don't want to be seen walking into the Aldi a few doors away.

 

[MASSEY]

... and some one was asking us to buy tesco shares.

This big loss can be described as the result of a deliquent management.

Yes and you would be in profit if you had.

Stick to your gold mine

 

[UKSBD]

Co-op is pricey i find, and the quality is worse than Tesco...

Co-op is pricey if you don't know how to use it, and pricey if you are not a member.

I don't do a big shop, but do 4 or 5 shops a week.
You soon get to know what the genuine offers are and when to buy stuff, I also get around £200 - £300 of coupons throughout the year as a member.

 

[Matt1959]

Lidl is an acquired taste I find. 10 yrs ago I forbid my missus to serve up anything from Lidl! Its holidays in Europe that made see the light. All of a sudden you see Lidl abroad as the supermarket of choice or thats what it seemed like. RIght now Im chomping a packet of Lidl salt and shake crisps - loads better than tesco or branded crisps and Lidl bread rolls are to die for.....

 

[Graham Curtis]

I don't have an Aldi near me but I do shop often at Lidl. The staff are friendly and cheerful and rush to open other tills if queues develop. Unlike Sainsbury who delight in closing tills even when there are long queues.

As for quality Lidl is streets ahead of Tesco.

I also find Lidl to be excellent quality. Also I wouldn't knock aldi until you have tried it, but some of the 'as good as the brands' stuff falls just short for me. Although does save you a decent amount of money.

 

[Marked]

As for quality Lidl is streets ahead of Tesco.

Have u tried their version of the Twix choco bar? its miles better than the original Twix. I'm eating one now.

As for Tesco, i've found for some things they are as expensive as M&S nowadays and M&S is so much nicer.

I lived in Germany as a kid so i go to Aldi at least once a week in the summer to get my bratties for our BBQ.

 

[Cobby]

i don't want to be seen walking into the Aldi a few doors away.

'Aldi-fication' at work.

 

[simon field]

Lidl is bang next door to Tesco where I live and they both feed off each other - works fine.

To describe a food as 'lower quality' is just your way of saying 'it's different'

Tescos fruit & veg is rock hard, has a window of eating opportunity of about 11 minutes and then it's mouldy. Lidls is great! Tesco has the same old same old stuff all year long whereas Lidl is always putting different stuff out.

Those are some of my observations. I hope that you like them.

 

[Deleted member 59730]

What I find difficult to understand is why the main UK supermarkets sell unripe fruit. They call it "Ripen at home" which doesn't alter it being unripe. Meanwhile supermarkets all over the world manage to sell their fruit ready to eat.

I also don't understand why supermarkets in Mexico have several defibrillators in each store while many UK ones have none.

 

[The Byre]

I also don't understand why supermarkets in Mexico have several defibrillators in each store while many UK ones have none.

Because the UK stores don't want to admit that most of their customers are lard buckets?

 

[vvaannmmaann]

Driving through mid Wales today I noticed an old style telephone box It had a defribrilllator in it.

 

[Cobby]

Driving through mid Wales today I noticed an old style telephone box It had a defribrilllator in it.

Sounds like BT alright: "charge 200!"